According to InvestmentNews, Securities America Inc. is under investigation by the Pennsylvania Department of Banking and Securities for the sale of non-traded REITs. Although charges have not been filed, Pennsylvania regulators have reportedly requested information from Securities America on its sale of non-traded REITs to Pennsylvania residents. Its unclear if the scope of Pennsylvania’s investigation is limited to Securities America or if it extends to addition broker dealers.
In 2013, Securities America was ordered by Massachusetts regulators to pay $7.6 million in restitution to investors. Securities America was one of six firms that settled with the state of Massachusetts and agreed to pay a total of $21.6 million to investors who purchased non-traded REITs.
The problem in Massachusetts stemmed from violation state rules that restrict the amount of alternative investments, such as non-traded REITs, that can be sold to investors. In Massachusetts, alternative investments cannot exceed more than 10% of an investor’s net worth.
Non-traded REITs and many other alternative investments are typically illiquid and complex investments that involve a high degree of risk. Often problems arising from non-traded REITs generally involves the failure of broker-dealers to adequately disclose the risks, commission structure, and illiquidity of these investments. Rules limiting the amounts investors can purchase are designed to help protect investors from such problems.
Broker dealers have a fiduciary duty to make investment recommendations that are consistent with a client’s age, risk tolerance, investment objectives, and net worth, among others. To the extent that some broker dealers may have overlooked suitability requirements and/or state rules, they may be held responsible for investment losses in a FINRA arbitration claim
If you purchased an alternative investment, such as non-traded REIT, from Securities America and would like to discuss your litigation options, please call The White Law Group at 312-238-9650 for a free consultation.
he White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.